Not exactly. The two articles are somewhat in accord, in the sense that Coulter is suggesting we buy the END PRODUCT (food) from other countries, if that's where it can be most efficiently produced, and the other is arguing that if a company is going to EMPLOY workers in this country - they need to be citizens, and not imported foreign nationals.

Logged

"You have enemies? Good. That means that you have stood up for something, sometime in your life." - Winston Churchill.

Mmm , , , , dunno about that. Ultimately either way the logic leads to paying the cheap labor in its country of origin-- which will happen at least some of the time with IT if the labor is blocked from coming here. I'm not taking sides here, I am assessing the logic.

Thomas Piketty: A new favorite of Obama and his economic council, Jack Lew Treasury Secretary and the rest of the globalist progressive crowd.

*********Economist Receives Rock Star Treatment

By JENNIFER SCHUESSLERAPRIL 18, 2014

French economists who boldly question the dominance of capital over labor — and call for a progressive global tax on wealth — visit the American halls of power about as often as French rock stars headline Madison Square Garden.

But those halls of power are where Thomas Piketty, a 42-year-old professor at the Paris School of Economics, has been singing his song of late.

Since touching down in Washington this week to promote his new book, “Capital in the 21st Century,” Mr. Piketty has met with Treasury Secretary Jacob Lew, given a talk to President Obama’s Council of Economic Advisers and lectured at the International Monetary Fund, before flying to New York for an appearance at the United Nations, a sold-out public discussion with the Nobel laureates Joseph Stiglitz and Paul Krugman, and meetings with media outlets ranging from The Harvard Business Review to New York Magazine to The Nation.

The response from fellow economists, so far mainly from the liberal side of the spectrum, has verged on the rapturous. Mr. Krugman, a columnist for The New York Times, predicted in The New York Review of Books that Mr. Piketty’s book would “change both the way we think about society and the way we do economics.”

Thomas Piketty at one of his New York talks this week. Credit Karsten Moran for The New York Times But through all the accolades, Mr. Piketty seems to be maintaining a most un-rock-star-like modesty, brushing away comparisons to Tocqueville and Marx with an embarrassed grimace and a Gallic puff of the lips.

“It makes very little sense: How can you compare?” he said on Thursday between gulps of yogurt during a break in his packed schedule — before going on to list the 19th-century data sets that Marx neglected to draw on in “Das Kapital,” his 1867 magnum opus.

“If Marx had looked at them, it would have made him think a bit more,” he said. “When I started collecting data, I had no idea where it would go.”

Mr. Piketty’s dedication to data has long made him a star among economists, who credit his work on income inequality (with Emmanuel Saez and others) for diving deep into seemingly dull tax archives to bring an unprecedented historical perspective to the subject.

But “Capital in the 21st Century,” which analyzes more than two centuries of data on the even murkier topic of accumulated wealth, has elicited a response of an entirely different order. Months before its originally scheduled April publication, it was generating intense discussion on blogs, prompting Harvard University Press to push the release forward to mid-February.

Since then, it has hit the New York Times best-seller list, and sold some 46,000 copies (hardback and e-book) — a stratospheric number for a nearly 700-page scholarly tome dotted with charts and graphs (as well as references to Balzac, Jane Austen and “Titanic”).

And not all those readers are economists. Six years after the financial crisis, “people are looking for a bible of sorts,” said Julia Ott, an assistant professor of the history of capitalism at the New School, who appeared on a panel with Mr. Piketty at New York University on Thursday. “He’s speaking to a real feeling out there that things haven’t been fixed, that we need to take stock, that we need big ideas, big proposals, big global solutions.”Photo

Mr. Piketty's book on sale after he spoke Wednesday at the Graduate Center at the City University of New York. Credit Karsten Moran for The New York Times Those big ideas, and the hunger for them, were on ample display at N.Y.U., where the standing-room crowd was treated to Mr. Piketty’s apology for having written such a long book, followed by a breakneck PowerPoint presentation of its main arguments, illustrated with striking charts.

At the book’s center is Mr. Piketty’s contention — contrary to the influential theory developed by Simon Kuznets in the 1950s and ’60s — that mature capitalist economies do not inevitably evolve toward greater economic equality. Instead, Mr. Piketty contends, the data reveals a deeper historical tendency for the rate of return on capital to outstrip the overall rate of economic growth, leading to greater and greater concentrations of wealth at the very top.

Despite this inevitable-seeming drift toward “patrimonial capitalism” that his charts seemed to show, Mr. Piketty rejected any economic determinism. “It all depends on what the political system decides,” he said.

Such statements, along with Mr. Piketty’s proposal for a progressive wealth tax and income tax rates up to 80 percent, have aroused strong interest among those eager to recapture the momentum of the Occupy movement. The Nation ran a nearly 10,000-word cover article placing his book within a rising tide of neo-Marxist thought, while National Review Online dismissed it as confirmation of the left’s “dearest ‘Das Kapital’ fantasies.”

But Mr. Piketty, who writes in the book that the collapse of Communism in 1989 left him “vaccinated for life” against the “lazy rhetoric of anticapitalism,” is no Marxian revolutionary. “I believe in private property,” he said in the interview. “But capitalism and markets should be the slave of democracy and not the opposite.”

Even if he doesn’t expect his policy proposals to find favor in Washington anytime soon, Mr. Piketty called his meetings there gratifying. Mr. Lew, he said, seemed to have read parts of the book carefully. A member of the Council on Economic Advisers corrected a small error concerning Balzac’s novel “Le Père Goriot,” which includes a discussion of getting ahead through advantageous marriage rather than hard work. “I was impressed,” Mr. Piketty said.

His book, however, ends not with an appeal to policy makers, but with a call for all citizens to “take a serious interest in money, its measurement, the facts surrounding it and its history.”

“It’s too easy for ordinary people to just say, ‘I don’t know anything about economics,’ ” he said, before rushing to his next appearance. “But economics is not just for economists.”

A version of this article appears in print on April 19, 2014, on page C1 of the New York edition with the headline: Economist Receives Rock Star Treatment.********

While a college degree might help get a job, it doesn't necessarily mean a good salary. According to a report released last month by the Bureau of Labor Statistics, some 260,000 workers with bachelor's degrees and 200,000 workers with associate's degrees are making the minimum wage.

The federal minimum wage is $7.25 an hour, and the minimum wage for tipped workers is $2.13 an hour. Some cities and states have recently raised their minimum wage, but the BLS report defines only those making $7.25 an hour or less as "minimum wage workers."

Income inequality is a fact, not an issue. But candidate Obama worked the guilt and envy for all he was worth. He gained power personally but his policies made income inequality worse.

They thrive on it, they live in it and they depend on it. The party of Income Inequality is the Democrats. Interestingly, the congressional district with the lowest level of income inequality is Michele Bachmann's district, the most conservative district in MN. The highest income inequality in the nation is found in Dem strongholds like NYC and LA.

...So no wonder Democrats are enamored with all of that rhetoric about inequality and class warfare. Their constituents, the audience they are addressing, are far more likely to live in the American equivalent of Rio de Janeiro, a class society starkly divided between squalid, hopeless, crime-ridden favelas and safe, beautiful downtown playgrounds for the rich....The Democratic Party is the party of inequality. They are the political faction that has a vested interest in inequality, because they depend on appeals to guilt and envy. To upper-middle-class elites, they promise to alleviate any spiritual discomfort caused by contemplating their relative good fortune, by the easy expedient of voting to spend a little extra money on welfare handouts—preferably the money of somebody just a little bit richer than them—rather than doing anything that would actually help the city’s poor find jobs and housing and transportation. For the poor, they promise to take the rich down a notch and distribute some of the loot....this does call into question the political wisdom of the Democratic Party’s effort to make income inequality the centerpiece of its national economic agenda, because this fall’s election will be decided by voters in suburban and rural districts, where inequality tends to be lower. And control of the Senate will be decided largely in states with low levels of inequality relative to the national average.

At a reading at the Harvard Book Store, the Massachusetts Democrat, author of A Fighting Chance, was asked about Thomas Piketty's new book, Capital in the Twenty-First Century, and specifically about its contention that trickle-down economics "definitively do not work."

Warren cut in. "Can we say that part again? 'Definitely do not work,'" she repeated. "Not as in that's somebody else's opinion or this comes out of a long-held political opinion. The data don't lie on this. He's got good historical data, and boy, what it shows is trickle down doesn't work. Never did, doesn't work. Just so we're all clear on the baseline. I just saved you 1,100 pages of reading." (The book is shorter than that; Warren may have assumed the audience would also read the online technical index.)

Warren, whose own book was going to be titled Rigged but ultimately went out with a more hopeful title, said that while Piketty's book could elicit despair, she found a hopeful note in it, too.

"You can read his book and you just wanna say, 'Ugh.' Because it says over and over -- look, I'll tell you the basic theme: The rich get richer," Warren said.

Piketty argues that the 200-plus years of income and wealth data complied by him and a team of researchers demonstrates that returns on capital (r) significantly outstrip growth in the real economy (g), which relentlessly drives up inequality. His basic equation -- r>g -- has upended the way economists understand wealth and income distribution.

"Here's the hopeful part in Piketty's book: Piketty makes the point that although the data keep documenting this happening, it's not like an act of nature. It's not like gravity and you can't fix it," Warren said. "Piketty's book makes the point that how much equality there is ... is a matter of the policies you choose to follow and that, for example, progressive taxation and investment in everyone's education helps to level the playing field."

Warren pointed to the period from the Great Depression up through the deregulatory era that began in the 1980s as reason for hope -- a period that she noted Piketty found to be an aberration in many ways.

"It is a time when we made those investments that built America's great middle class and we made those decisions -- not we in this room, but our parents, our grandparents, they made those decisions. They said, 'You put a cop on the beat so nobody steals your pension, you do that on Wall Street.' But they also said, 'You tax progressively and then you make those investments.' For those who made it big, God bless 'em, that's great, but they've gotta pay a piece of that forward so the next kid has a chance to make it big and the kid after that and the kid after that. That's what defines America."

Piketty indeed credits high marginal tax rates on wealth in the middle of the 20th century as a driver of flattening U.S. inequality during that period, although he also cites the destruction of capital from the world wars and the anomalously high economic growth rates that carried into the late 1960s and, in some countries, into the 1970s. He describes that high growth as "catch up" and suggests it will be difficult to repeat such a phenomenon in the 21st century.

Piketty proposes a steeply progressive wealth tax, which Warren referenced favorably on Thursday. The suggestion was widely panned by the political class, but it is already earning dividends. On Friday, New York Times columnist David Brooks suggested that conservatives respond by embracing a "beefed up inheritance tax" and "progressive consumption taxes."

Warren also joked with the audience that they may find her book a bit more digestible. "Have you seen Piketty's new book?" she asked. "His book has tables and graphs; this book doesn't. It's one of my first books with no graphs in it, just pictures."

I watched Warren on the Stewart (or was it Colbert?) show recently, and she is not stupid. Indeed, she may well be a formidable opponent of American freedom for many years to come. In her appearance, she used the fact that the Feds are profiteering mightily on student loans very effectively. (Yes, she left out the fact that this came into being via, of all things, Obamacare).

Quick: Give a talking point summary of why the notions for which the Piketty book is being cited are wrong , , ,

I would first refer to Doug's well constructed arguments on the topic of economic disparity rather than clumsily attempt to rephrase them here.

Secondarily, I note that repackaged quasi-marxism sucks just like the original and Pisketty appears to shave off the sharp edges of facts to justify his leftist just-so stories.

He is seized upon by the usual suspect to justify their vote buying, centrally run economy ideals. Of course, they are attracted to the power that such economic systems grant the political class and give only lip service to the poor while they jet-set to exotic vacations.

"Just so stories" -- not bad, this has promise , , , keep working with it. The ad hominems , , , less so.

Much like global warming, if inequality is such a serious problem, why don't the political figures act like it is. Imagine how many impoverished people Warren could help if she liquidated her assets and donated it to charity...

Adding to what is already posted, one might look at George Gilder's latest theory - wealth is knowledge. Many ramifications come out of this theory. With experience, trial and error and occasional successes over time we gain in our knowledge of how to build our product, deliver our service, know our customers and their needs, know our market, know how to compete and keep up with or ahead of our competition, keep our promises, and all the other building blocks of innovation, successful production and useful productivity. We hopefully don't carry only the same amount of knowledge that we had a year ago, nor hopefully are we equal to an entry level beginner or someone who doesn't try his or her hardest, etc. The only possible point where we could all be equal is at the zero point.

Critics of inequality don't say no inequality is optimal, but they infer that by arguing that all inequality is bad and greater inequality is necessarily worse.

The fact that some people get rich in a free society is not a bad thing for them or for anyone else. We need much more of that. Much more.

It's not trickle down economics, but we do live in an interconnected economy. Success around you amplifies your own opportunities.

What the rich make in income is none of our business, except to measure and tax it, same as for everyone else. What the poor make is only our business because we want to help. What we should be doing, in terms of public policy, is to assess all programs that address poverty (lack of earning power) and stop doing the things that are making things worse.

To enact a global wealth tax is to renounce the Declaration of Independence. We aren't subjects of the King anymore and we most certainly aren't subjects of the UN today. Things like the electoral college, the structure of the Senate and framework of the constitution are all designed to slow down the stupid ideas and help keep us from giving away our freedom and autonomy to the passing whims of the majority. Americans through their representatives can decide how much to tax Americans and how much and where to help others around the globe.

This could go under Glibness but by causing zero growth in the economy and pointing to income inequality as if it were a new and unnatural phenomenon, President Obama and the Democrats have brought back the illusion that political economics is a zero-sum game. They think like Putin, you can only get what you take from someone else. It is not so.

The worse they do with the economy the more we need them, so they say.

As Scott G pointed out, the liberals and leftist point to the industries with the very most government intrusion, like energy, transportation, housing, healthcare and education, and conclude the the free market left to itself simply does not work. When mortgages became 90% federal, CRAp was instituted, the Fed dropped real interest rates to free money for an extended period, they told us the market just can't be trusted!

No one wants a market with no regulation. What we want from government is to enforce a level playing field for the private sector to flourish.

The economic debate is now sharply focused on the issue of income inequality. That may not be the debate Democrats want to have, however. It’s negative and divisive. Democrats would be better off talking about growth — a hopeful and unifying agenda.

Democrats believe income inequality is a populist cause. But it may be less of a populist issue than an issue promoted by the cultural elite: well-educated professionals who are economically comfortable but not rich. There’s new evidence that ordinary voters care more about growth.

Growth and inequality are not separate issues. Nobel Prize-winning economist Joseph E. Stiglitz wrote, “Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena when they are in fact intertwined. Inequality restrains and holds back our economic growth

The question is whether Democrats want to talk about punitive and confiscatory policies aimed at curbing the power of the wealthy and special interests or an agenda aimed at growing the economy for everyone.

Policies aimed at reducing inequality gain more traction with voters when they are pitched as pro-growth policies. Issues like raising the minimum wage, extending unemployment benefits, pay equity for women, student-loan debt relief, increasing the earned income tax credit and closing tax loopholes for the rich.

The argument is straightforward: More fairness means more growth. When the incomes of the poor and the middle class are growing, consumption — the principal driver of economic growth — goes up. So do tax revenues and investment in business and education.

Former President Bill Clinton, in a speech at Georgetown University last week, called inequality “a severe constraint on growth.” He defended his administration’s pro-growth agenda. “My commitment was to restore broad-based prosperity to the economy,” Clinton declared, “and to give Americans a chance.” He noted that 7.7 million Americans were lifted out of poverty during his eight years in office.

During the last four years of Clinton’s presidency, the nation’s economic growth rate averaged 4.5 percent a year — three times as high as last year. Plus we had a budget surplus. Yes, incomes grew for the richest 20 percent of Americans during the 1990s. But, as Clinton noted, they grew faster for the poorest 20 percent. “It worked out pretty well,” he said. Even though the left criticized his policies of financial deregulation, welfare reform, free trade and balancing the budget. We now have evidence from the GlobalStrategyGroup, a Democratic consulting firm, that the growth agenda is more popular than the inequality agenda. Asked how much of a priority it should be for Congress to “promote an agenda of economic growth that will benefit all Americans,” 78 percent called it extremely or very important. Growth topped the list. At the bottom: addressing income inequality (50 percent) and spreading wealth more evenly (43 percent).

Would voters prefer a candidate focused on “more economic growth” or “less income inequality”? No contest. Growth beat inequality, 80 percent to 16 percent. Growth also came out ahead of “increasing wages,” “expanding the middle class,” “economic justice to level the playing field for middle- and low-income Americans” and even “more economic fairness.”

That doesn’t mean Democrats have to choose between growth and inequality. The GSG poll showed that Democratic policies aimed at reducing inequality are seen as promoting growth. Solid majorities (ranging from 54 percent to 74 percent) said that providing more income opportunity for all, increasing spending on education and infrastructure, making seniors’ retirement more secure, increasing the minimum wage and asking the wealthy to pay more taxes would lead to more economic growth rather than less.

Democrats already have credibility on the inequality issue. Asked which party can be trusted “to enact policies that will lead to more income opportunity for all,” Democrats lead Republicans 46 percent to 34 percent.

What Democrats lack, however, is credibility on the growth issue. Asked which party can be trusted “to enact policies that will lead to more economic growth,” it’s a dead heat: Democrats 39 percent, Republicans 39 percent. After George W. Bush and Barack Obama, voters aren’t sure which party can deliver prosperity.

What’s driving the inequality frenzy? New York Times columnist David Brooks wrote, “If you are a young professional in a major city, you experience inequality firsthand. But the inequality you experience most acutely is not inequality down, toward the poor; it’s inequality up, toward the rich.” They’re the people who are buying Thomas Piketty’s book advocating redistribution of wealth.

These days, a lot of American politics is a war between two elites. For years, polls have revealed that the wealthier you are, the more likely you are to vote Republican. But the better educated you are, the more likely you are to vote Democratic. So in 2012, we got a race between Republican nominee Mitt Romney, who represented the elite of wealth, and Obama, who represented the elite of education.

The debate over inequality is a debate between these two bitterly antagonistic elites. An army of country-club conservatives doing battle with an army of NPR liberals. The fabulously wealthy Koch brothers, for example, versus the fabulously well-educated Senator Elizabeth Warren (D-Mass.), a former Harvard professor.

What do ordinary voters want? They want an economic boom.

Ronald Reagan got elected in a recession and delivered a boom in his second term. Clinton got elected in a recession and delivered a boom in his second term. Voters’ deep dissatisfaction with Obama right now is due mostly to his failure to deliver on the economy. (more at the link)

Like the foundation of a home, America’s economy must be built on something real, something solid, and something firmly planted. Neither federal stimulus in the form of easy money, nor fiscal stimulus in the form of government borrowing, can produce real, lasting prosperity or a sound financial future. …

No government regulator, no matter how intelligent, can see into the future or micromanage the economy. Let us consider the testimony of former Chairman Alan Greenspan, before this very committee, in January of 2001. Chairman Greenspan came to alert Congress about an urgent policy decision it would have to make. And what was that decision? Whether to raise interest rates? Reduce subprime lending? Reform entitlements? No, Chairman Greenspan came to warn us that we would have to decide how to spend all of the surplus money after we soon paid off the entire federal debt of the United States. He predicted budget surpluses “well past 2030 despite the budgetary pressures from the aging baby boom generation,” and said that “the highly desirable goal of paying off the federal debt is in reach before the end of the decade.” But, Greenspan warned that after “continuing to run surpluses beyond the point at which we reach zero or near-zero federal debt,” we would need to “eschew private asset accumulation.” He added for emphasis that “the emerging key fiscal policy need is to address the implications of maintaining surpluses beyond the point at which publicly held debt is effectively eliminated.”

The Federal Reserve is not infallible. Our responsibility as legislators is to provide oversight. We are one small voice for the people in this process. In 2011, the Fed forecasted growth of between 3.5 and 4.3 percent in 2013. Actual growth was an anemic 1.9 percent—roughly half. This is a drastic over-estimation, not a small miss. And, the Fed overestimated 2013 growth in every formal quarterly prediction for each year since 2011. …

Let us consider whether the stimulus policies of the last five years have produced the results predicted by the Fed. Since 2007, interest rates have been near zero and the federal government has added $8.3 trillion to the debt. But where do we stand?

* The population has grown by 15 million since 2007, yet there are still 500,000 fewer people working than in 2007.

* The workforce participation rate has fallen to 63 percent of the civilian population, which is the lowest level in 36 years.

* Median household income has fallen an average of $2,268 per household. The low income cohort has grown while the middle income group has shrunk. The middle class is getting smaller in America.

While the stimulus mindset in Washington has at least, so far, been better for the investor class and the political class, it has not been good for the working class. Not only has this stimulus failed American workers, but it has left us with record debt and an economy dependent on unprecedented policies that cannot continue. …

The time has come to return to first principles: spend what you have, plan for the future carefully, lay out policies that are prudent and can be maintained long-term, don’t borrow what you cannot pay back. Here are ways we can improve the economy and economic stability—without government stimulus:

* Produce more American energy

* Eliminate all costly and wasteful regulations

* Make the tax code more globally competitive

* Ensure fair trade so our workers can compete on a level playing field

* Adopt an immigration policy that serves American workers

* Turn the welfare office into a job training center

* Streamline the government to make it more productive, and

* Balance the federal budget to restore economic confidence

These are all concrete steps that will work. We need to return to those principles and move this country forward.

Global Growth Worries ClimbPolicy Makers in Europe, U.S. and China Grapple With What Steps to Take NextBy Brian Blackstone, Jon Hilsenrath and Marcus WalkerUpdated May 15, 2014 7:52 p.m. ET

Five years after the financial crisis ended, soft growth in Europe, a stop-and-start U.S. recovery and waning momentum in China have policy makers groping for what to do next.

A spate of worrying economic data Thursday shook stock and bond markets. Economic activity in the 18-country euro zone expanded at a weak annual rate of 0.8% during the first quarter, data released Thursday showed. Excluding Germany, which grew at a robust 3.3% pace, the rest of the euro-area economy contracted slightly during the quarter.

European Central Bank officials are now moving toward enacting additional low interest-rate policies to prevent the region from sliding into a lengthy period of economic stagnation, while the U.S. Federal Reserve guardedly tries to wind down a bond-buying program meant to revitalize economic growth.

Meantime, Chinese authorities are trying to prod banks to lend more to first-time home buyers shut out of their real-estate market. U.S. officials privately say they expect Chinese officials to act to boost their economy and support banks if growth slows severely, though Chinese officials say they will avoid major stimulus if it undermines economic overhauls or deepens credit woes.

Underscoring the sense of angst, stock prices dropped sharply Thursday in Europe and the U.S. The Dow Jones Industrial Average fell 167.16 points, or 1.01%, to 16446.81.

Yields on bonds issued in big developed markets continued to fall Thursday. Yields on German bunds with 10-year maturities sank to 1.307%, their lowest level in a year, while yields on 10-year U.S. Treasury notes fell to 2.498%, the lowest level in six months.

"It will take a long time before we see a real recovery," said Andrea Illy, Chairman and chief executive of Italian coffee maker Illy Caffè. "I'm really skeptical on how and if we can grow, and I hear the same feelings among entrepreneurs and consumers in Italy."

New U.S. data released Thursday showed the mixed economic backdrop that Fed officials confront as they scale back a bond-buying program aimed at lowering long-term interest rates, and consider how much longer to keep short-term rates near zero.

U.S. industrial output slumped in April, according to a Fed report, and a survey showed sentiment of U.S. home builders slipped. Many Fed officials believe U.S. growth is rebounding in the second quarter after slumping in the first period largely because of bad weather. Hiring has been robust of late. Still, some officials see the first half of the year shaping up as a disappointment.

"My guess is that we will see some pickup as we get into the second half of the year, but the longer we go without getting the 3% growth that many people had in their forecasts, the more concerned you have to be that there are other things going on that we hadn't fully appreciated," Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview Thursday. Mr. Rosengren is in the camp of Fed officials who have supported aggressive responses to slow growth and low inflation.

Complicating matters for the Fed are signs that inflation is heading back toward the Fed's 2% goal after running below that for nearly two years. The U.S. consumer-price index rose 2% in April from a year earlier, a notable pickup from a 1.5% pace in March and a 1.1% pace recorded in February.

Mr. Rosengren said it was "too soon to know" whether the latest figures indicate the economy is heating up enough to push consumer prices much higher. The Fed's preferred measure of inflation, called the personal consumption expenditures price index, is "still pretty low," he said.

Fed Chairwoman Janet Yellen told lawmakers last week she expected the central bank to finish winding down its bond-buying program by the fall.

If inflation picks up, it could hasten a Fed discussion about when to start raising interest rates, but such a debate still looks premature. A sharp drop in long-term U.S. interest rates in recent days suggests investors—along with most Fed officials—don't see rate boosts until well into next year at the earliest.

In one step to support a languishing housing sector, the Obama administration and federal regulators are directing Fannie Mae and Freddie Mac, the government-owned housing-finance giants, to direct their focus toward making more credit available to homeowners, rather than pulling back from the mortgage market.

China, the world's second-largest economy, is another major factor shaping the global economic outlook. A report out earlier this week showed 9.9% declines in home sales during the first four months of the year in China, compared with a year earlier. Retail sales and industrial production also slowed.

Authorities have already rolled out what they call "mini-stimulus" measures. And in one recent sign of concern about China's sluggish property market, People's Bank of China officials earlier this week pushed the nation's major lenders to give priority in mortgage lending to first-time home buyers, according to a statement posted on the central bank's website Tuesday. The central bank also pushed the commercial banks to set mortgage rates at "reasonable" levels.

For now, though, the most aggressive government efforts to boost growth are taking shape in Europe.

ECB President Mario Draghi put financial markets on notice last week that the bank will probably announce new measures in June to try to lift inflation, which was 0.7% in April, well below the ECB's target of just under 2%.

More officials emerged Thursday in support of Mr. Draghi's comments. "We are determined to act swiftly, if required, and don't rule out further monetary-policy easing," ECB Vice President Vitor Constancio said in a speech in Berlin.

At the ECB, as at the Fed, officials have their doubts about how much more they can be expected to do to boost an economy facing a wide range of headwinds, many of which are beyond their control or mandate to confront.

Legacies of the crisis—including debt overhangs, impaired banks, high borrowing costs for small businesses and a general shortage of demand—are combining with Europe's longer-term structural problems, such as rigid labor markets and high taxes on employment, to slow growth.

Although it isn't yet clear how ambitious or effective the ECB's next steps will be, interest-rate cuts and some measures to encourage more bank lending look increasingly likely.

"We're seeing a cyclical pickup in activity, but it's anemic, given the depth of the slump," said Simon Tilford, deputy director of the Center for European Reform, a nonpartisan think tank in London. "Typically, you'd expect faster growth in the aftermath of such a recession," he said.

Required reading for Brian Wesbury, and for all so-called 'millennials'.

Ignoring the path to recoveryWednesday - May 28, 2014By George F. Will

Published: Wednesday, May 28, 2014, 9:00 p.m.

It is said that the problem with the younger generation — any younger generation — is that it has not read the minutes of the last meeting. Barack Obama, forever young, has convenient memory loss: It serves his ideology. His amnesia concerning the policies that produced the robust recovery from the more severe recession of 1981-82 has produced policies that have resulted in 0.1 percent economic growth in 2014's first quarter.

June begins the sixth year of the anemic recovery from an 18-month recession. Even if what Obama's administration calls “historically severe” weather — aka, winter — reduced GDP growth by up to 1.4 percentage points, growth of 1.5 percent would still be grotesque.

The reason unemployment fell by four-tenths of a point (to 6.3 percent) in April while growth stalled is that 806,000 people left the labor force. There are about 14.5 million more Americans than before the recession but nearly 300,000 fewer jobs, and household income remains below the pre-recession peak.

Paul Volcker, whose nomination to be chairman of the Federal Reserve Board was Jimmy Carter's best presidential decision, raised interest rates to put the nation through a recession to extinguish the inflation that, combined with stagnant growth, ruined Carter's presidency. Then came the 1983-88 expansion, when growth averaged 4.6 percent, including five quarters over 7 percent.

Ronald Reagan lightened the weight of government as measured by taxation and regulation. Obama has done the opposite. According to Clyde Wayne Crews Jr. of the Competitive Enterprise Institute, four of the five largest yearly totals of pages in the Federal Register — the record of regulations — have occurred during the Obama administration. The CEI's “unconstitutionality index,” measuring Congress' delegation of its lawmaking policy, was 51 in 2013. This means Congress passed 72 laws but unelected bureaucrats issued 3,659 regulations.

The more than $1.1 trillion of student loan debt is restraining consumption, as is the retirement of baby boomers. More than 40 percent of recent college graduates are either unemployed or in jobs that do not require a college degree. This is understandable, given that 44 percent of the job growth since the recession ended has been in food services, retail clerking or other low-wage jobs.

In April, the number of persons under 25 in the workforce declined by 484,000. Unsurprisingly, almost one in three (31 percent) persons 18 to 34 are living with their parents, including 25 percent who have jobs.

So, the rate of household formation has, Neil Irwin reports in The New York Times, slowed from a yearly average of 1.35 million in 2001-06 to 569,000 in 2007-13. However, a Wall Street Journal headline announces that Washington has a plan: “U.S. Backs Off Tight Mortgage Rules.” It really is true: Life is not one damn thing after another; it is the same damn thing over and over.

There is, however, something new under the sun. The Pew Research Center reports that Americans 25 to 32 — “millennials” — constitute the first age cohort since World War II with higher unemployment or a greater portion living in poverty than their parents at this age. But today's millennials have the consolation of having the president they wanted.

For those in Washington obsessed with reducing income inequality, the standard prescription involves raising taxes on the well-to-do, increasing the minimum wage, and generally expanding government benefits—the policies characterizing liberal, blue-state governance. If only America took a more “progressive” approach, the thinking goes, leaving behind conservative, red-state priorities like keeping taxes low and encouraging business, fairness would sprout across the land.

Among the problems with that view, one is particularly surprising: The income gap between rich and poor tends to be wider in blue states than in red states. Our state-by-state analysis finds that the more liberal states whose policies are supposed to promote fairness have a bigger gap between higher and lower incomes than do states that have more conservative, pro-growth policies.

The Gini coefficient, a standard measure of income inequality, calculates the ratio of income at the top of the income scale relative to the income of those at the bottom. The higher the ratio, the more inequality. A Gini coefficient of zero means perfect equality of income and a Gini coefficient of one represents perfect inequality, such as if one person has all the income.

The measure has some obvious flaws: If everyone is doing better but some get richer at a faster pace, the Gini coefficient will increase, and so rising prosperity and economic progress will look like retrogression. Still we used it in our analysis, since it is the favorite measure among advocates of greater equality and the stick used to beat free markets. Conveniently, the U.S. Census Bureau annually calculates the Gini coefficient for the 50 states and the District of Columbia.

According to 2012 Census Bureau data (the latest available figures), the District of Columbia, New York, Connecticut, Mississippi and Louisiana have the highest measure of income inequality of all the states; Wyoming, Alaska, Utah, Hawaii and New Hampshire have the lowest Gini coefficients. The three places that are most unequal—Washington, D.C., New York and Connecticut—are dominated by liberal policies and politicians. Four of the five states with the lowest Gini coefficients—Wyoming, Alaska, Utah and New Hampshire—are generally red states.

In the Northeast, the state with the lowest Gini coefficient is New Hampshire (.430), which has no income tax and a lower overall state tax burden than that of its much more liberal neighbors Massachusetts (Gini coefficient .480) and Vermont (.439). Texas is often regarded as an unregulated Wild West of winner-take-all-capitalism, while California is held up as the model of progressive government. Yet Texas has a lower Gini coefficient (.477) and a lower poverty rate (20.5%) than California (Gini coefficient .482, poverty rate 25.8%).

Do the 19 states with minimum wages above the $7.25 federal minimum have lower income inequality? Sorry, no. States with a super minimum wage like Connecticut ($8.70), California ($8), New York ($8) and Vermont ($8.73) have significantly wider gaps between rich and poor than those states that don’t.

What about welfare benefits? A Cato Institute report, “The Work Versus Welfare Trade-Off: 2013,” measured the value of all welfare benefits by state in 2012. In general, the higher the benefit package, the higher the Gini coefficient. States with high income-tax rates aren’t any more equal than states with no income tax. The Gini coefficient measures pretax, not after-tax income, and it does not count most sources of noncash welfare benefits. Still, there is little evidence over time that progressive policies reduce income inequality.

To be clear, our findings do not show that state redistributionist policies cause more income inequality. But they do suggest that raising tax rates or the minimum wage fail to achieve greater equality and may make income gaps wider.

Here is why we believe these income redistribution policies fail. The two of us have spent more than 25 years examining why some states grow much faster than others. The conclusion is nearly inescapable that liberal policy prescriptions—especially high income-tax rates and the lack of a right-to-work law—make states less prosperous because they chase away workers, businesses and capital.

Northeastern states and now California are being economically bled to death by their pro-growth rivals, especially in the South. Toyota didn’t leave California for Texas for the weather. The latest IRS report on interstate migration provides further confirmation: The states that lost the most taxpayers (as a percent of their population) were Illinois, New York, Rhode Island and New Jersey.

When politicians get fixated on closing income gaps rather than creating an overall climate conducive to prosperity, middle- and lower-income groups suffer most and income inequality rises. The past five years are a case in point. Though a raft of President Obama’s policies—such as expanding the earned-income tax credit and food stamps, and extending unemployment benefits—have been designed to more fairly distribute wealth, inequality has unambiguously risen on his watch. Those at the top have seen gains, especially from the booming stock market, while middle-class real incomes have fallen by about $1,800 since the recovery started in June 2009.

This is a reversal from the 1980s and ’90s when almost all income groups enjoyed gains. The Gini coefficient for the United States has risen in each of the last three years and was higher in 2012 (.476) than when George W. Bush left office (.469 in 2008), though Mr. Bush was denounced for economic policies, especially on taxes, that allegedly favored “the rich.”

Our view is that John F. Kennedy had it right that a rising tide lifts all boats. It would be better for low- and middle-income Americans if growth and not equality became the driving policy goal in the states and in Washington, D.C.

Yes.a. Elect us because of income inequality.b. Dems win, Inequality gets worse.c. Elect/re-elect us because of income inequality.d. Inequality gets worse yet.e. repeatf. repeat.g. repeat...z. people finally catch on?--------------------------------------It is a familiar formula:Elect us because of poverty.We win and our policies cause poverty to worsen and become permanent.Repeat.------------------------------------Worst case scenario for Democratic strategist:Republicans are the party of the wealthy.Republicans win and open economic freedom to everyone.Everyone who wants to - succeeds. Fewer and fewer people need the party of bloated government.

"Another drag on growth last quarter was probably also temporary: Companies sharply cut back on their restocking of goods. That wasn't unexpected. It occurred after companies had aggressively ramped up restocking in the second half of last year. The slowdown in the January-March quarter reduced annual growth by 1.6 percentage points, the government said. With growth strengthening since spring began, businesses are restocking at a faster rate again. Inventories grew 0.6 percent in April, the most in six months."

Downturn not caused by, as others including yours truly allege:a) largest new entitlementb) largest new taxesc) largest new regulations - in the history of the republic.

To miss 3% shrinkage is colossal error. To miss 3% shrinkage when you are an economist forecasting 3% growth is quit-the-profession level error. To miss it AFTER IT HAPPENED is a jump-out-the-window danger alert. I hope our own Brian Wesbury works on the first floor of the First Trust Towers!

Plowhorse growth means slow and lousy growth, but steady and predictable. They couldn't 'predict' this downturn in the first 2 3/4 months AFTER IT HAPPENED! Did we really not know the first quarter weather by the end of first quarter?! Other than amateurs like us and the 'pros' who always predict doom, who saw this coming? It turns the term Professional Economist into an oxymoron, not one notch above professional journalist.

The greatest irony is that the number one threat that our economy faces, in the view of the current ruling class who just levied the above entitlements, taxes and regulations, is WARMING. The greatest security threat we face in the world is WARMING. Not a little fluctuation here and there, but worsening, spiraling, out of control, human caused and life as we know it ending WARMING. Yet the reason our economy is tanking is UNEXPECTEDLY COLD WEATHER. Go figure!

Remember the President’s repeated assurances that his bailouts and Obamacare would revive the economy? Those claims probably sound pretty hollow to the President’s one-time supporters, young adults.These eight graphs, which examine adults under the age of 25 who have moved out of their parents’ home, via PolicyMic, show that this group is suffering the worst from dwindling incomes and long-term unemployment.

1. Annual household income is at shockingly low levels for families headed by someone under the age of 25. Forty percent of these households get by on only $10,000 a year.

3. Young unemployment is over double the national average. It peaked in spring 2010 at 19.5%, but still remains higher than it was at the onset of the recession.

4. Despite an increase in the national minimum wage in 2009, and several states across the country raising their minimum wages, median hourly wages for people under 25 are lower than they were 10 years ago. Some economists argue that the minimum wage increase actually contributed to these lowered hourly wages and higher unemployment.

5. Almost 90% of under-25 households rent, as oppose to own their living space. This lowers their equity and oftentimes their credit scores.

6. For over 50% of under-25s who rent, the monthly rent eats up over 35% of their already small incomes. This provides little income for this group to set aside money for savings or retirement.

7. On top of their rent, high cost of living and low incomes, 43% of this population is hit with paying off student debt.

8. Recent college graduates have record-breaking debt… and it looks like it’ll go even higher.

Young people are looking for another way – because the economy they’ve experienced for the past 5 years just hasn’t been working.A change is necessary in Washington; let’s just hope that the detrimental effects of this economy won’t have long-lasting implications.

It's OK, I'm told amnesty will create millions of jobs and contribute to the tax base.

Plowhorse!

After all these years and all these mistakes, liberal politicians and liberal voters just don't seem to get that all these well-intended programs come with serious unintended consequences. Serious enough to take down our economy, our culture and our country.

Same goes for the amnesty and immigration ideas.

The followers who believe them scare me more than the leaders who lie to them.

As Rush L has long said, we don't want to persuade or change them, we want to defeat them.

Handcuffing investors, businesses and employers is not how you help middle class employees.

There must have been thousands of new jobs created in the past few years just to comb through the minutiae of the employment data looking for negative nuggets. All someone needs is access to the Bureau of Labor Statistics website and a calculator. Then, you go through the jobs data and find some stuff to spin negatively.The job doesn’t pay that well, unless you have a radio or TV show or website with advertising. But, it’s politically rewarding on both the right and the left to prove how bad the economy is, even when the jobs data are improving month after month. The right gets to badmouth the President; the left gets to argue for more government spending.

This past month was no different. Payroll jobs rose 288,000 in June. Private sector jobs were up 262,000 – the 52nd consecutive monthly gain. From January through June this year, private sector jobs rose 1.33 million, the most job growth in the first six months of any year since 1998.

The unemployment rate fell to 6.1% in June – down from 7.5% a year ago. The median duration of unemployment fell to 13.1 weeks in June – it was 17.1 weeks in December 2013. Average hourly earnings rose 0.2%, and are up 2.0% from a year ago – this is not rapid wage growth, but average hourly numbers do not include benefits, tips, bonuses or sales commissions – in other words, this wage data is not the final word on income.

Finally, one of Janet Yellen’s favorite gauges of labor market strength, the quit rate – those voluntarily leaving jobs – rose to 9.0% of all unemployed last month. This is the highest quit rate since September 2008 and a sign of rising confidence in the jobs market.

Those who are negative about the economy have focused on four areas. 1- labor force growth 2 – part-time jobs 3 – wages 4- productivity.

The labor force has contracted by 128,000 in the past year. This does not erase, eradicate, or make irrelevant the positive job growth, but it’s clearly helped pull down the unemployment rate. Some note the number of adults “not in the labor force” is up 2.39 million in the past year. But this is largely due to aging Baby Boomers. And, even without aging Boomers, as the population grows it’s normal for the non-labor force population to grow, too. With only one exception (2006), the number not in the labor force has grown in every year since 1997.

Part-time jobs rose sharply last month, but total part-time employment was 27.4 million in June, which is down from 27.6 million for the full-year 2009. In other words, despite month-to-month volatility, job growth in the past five years has been full-time jobs.

We already mentioned wages, but even the flawed measure of average hourly earnings does not paint a picture of anything close to recession. Average hourly earnings are up 2.0% in the past year, while total hours of work are up 2.1%. In other words, total earnings (hours times earnings) are up 4.1%, which is enough to keep spending on an upward trend.

Some fret about a slowdown in productivity growth during Q1 (declining GDP with rising jobs), but this is a one-off issue. We forecast real GDP likely grew at a 3% annual rate in Q2. In addition, measures of productivity are woefully flawed.

What we find most interesting is that a vast majority of those who work so hard to be negative about employment data support Republican politicians. They have been relentless in using any negative economic news in an attempt to gain political advantage over the past five years.

But, they ought to start taking credit for policies that have helped accelerate job growth and cut the unemployment rate. The improvement so far in 2014 is directly related to the end of extended unemployment benefits. By ending the 99-week payment of unemployment benefits, many were encouraged to find jobs, while others, who only said they were looking for jobs in order to get benefits, dropped out of the labor force. (KRAUTHAMMER MAKES THE SAME POINT)

Five years into an economic recovery was past time to end those benefits, and the improvement in the job market this year was predicted by free market economic models. By trashing the improved data on jobs, those on the political right are dismissing the benefits of their own policies. We don’t understand this, but then again we are just economists, not brilliant political strategists.

The bottom line is that our constituents are investors, not Republicans or Democrats. As a result, we look at the data and assess its impact on markets. The June employment report was a very positive and optimistic one. Stay cool, stay long, and stay optimistic. The Plow Horse Economy is trotting just a little bit, and should continue to do so.

Friday, June 6, 2014 by Casey Mulligan, Economist, University of Chicagohttp://caseymulligan.blogspot.com/2014/06/employment-just-went-down.htmlEmployment just went downPlease don't forget that the establishment survey excludes agricultural workers and many of the self-employed. The establishment survey has a lot going for it, but only for the part of the economy it covers. For anyone interested in the national economy, I recommend using the establishment survey plus unincorporated self-employed (from the household survey, seasonally adjusted) plus agricultural workers (also from the household survey, seasonally adjusted). See also the BLS on this matter.

One of the critiques of the household survey is that it is noisy month-to-month -- I agree. But my proposed augmentation of the establishment survey is not particularly noisy because the vast majority of its employment is from the establishment survey.

[The average monthly change since December 2013 has been +152: just keeping up with population growth. The avg monthly change in 2013 was +171. This employment measure has increased 36 out of the past 40 months (going back to 2010, not counting this month). This month's change is 1.9 standard deviations below the average change since 2010.][2010 was the labor-market's low point by most employment measures. But unincorp self-employment has fallen another 567,000 since then. If you use the establishment survey, you miss that.]Posted by Casey B. Mulligan, Univ. of Chicago

I recently read an article in Foreign Affairs magazine (it is out in my truck so I do not have the exact name handy) but it spoke of a number of trends. IIRC it spoke of

a) ideas plus cheap labor e.g. Apple's strategy of "Conceived in America, assembled in China". b) With globalization, this undermines Americans who work in sectors of the economy where they have to compete with foreign laborc) Capital/automation-- a trend which threatens cheap labor, especially when labor seeks more money. d) digitization of capital: a trend which threatens the returns on capital-- the marginal cost of an additional unit of software is essentially zero.

So, who wins? Those who come up with the ideas, the first movers. The article called the dynamic a Pareto Power Rule or something like that and said that the dynamic definitely led to increasing income inequality.

My point here is that on top of the hideous costs of the fascist economic model currently being applied, there are ALSO deep underlying trends which which present deep questions that must be answered.

The Lingering, Hidden Costs of the Bank BailoutWhy is growth so anemic? New economic activity has been discouraged. Here are some ways to change that.By Vernon L. SmithJuly 23, 2014 8:01 p.m. ET

The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. The bailout through the Troubled Asset Relief Program has been justified by the Federal Reserve and Treasury as preventing a financial collapse of the economy.

The rescue, however, had a hidden cost for the economy that is difficult to quantify but can be crippling. New economic activity is hobbled if it is not freed from the burden of sharing its return with investors who bore risks that failed. The demand for new economic activity is enlarged when its return does not have to be shared with former claimants protected from the consequences of their risk-taking. This is the function of bankruptcy in an economic system organized on loss as well as profit principles of motivation.

Financial failure and the restructuring of assets and liabilities motivates new capital to flow directly into new enterprise activity at the cutting edge of technology—the source of new products, output and employment which in turn provide new growth and recovery. Requiring new investment to share its return with failed predecessors is tantamount to having required Henry Ford to share the return from investment in his new horseless carriage with the carriage makers, livery stables and horse-breeding farms that his innovation would render obsolete.

This burden on new investment helps explain the historically weak recovery since the "Great Recession" officially ended in June 2009, and the recent downturn in gross-domestic-product growth. The GDP growth rate for all of 2013 was just 1.9%, and in the first quarter of 2014 it declined at a seasonally adjusted annual rate of 2.9%.Enlarge Image

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With only two balance-sheet crises in the U.S. in the past 80 years, 1929-33 and 2007-09, we have little experience against which to test alternative policies and economic responses. Japan and Sweden are examples of economies that followed distinct pathways after crises in the early 1990s. In Japan the economy floundered in slow growth for over two decades; Sweden recovered much more quickly. The difference can be attributed to following different policies in the treatment of severe bank distress.

Japan's real-estate market suffered a major decline in the early 1990s. Home prices peaked in the fall of 1990 and fell by 25% in two years. By 2004 they had fallen 65%. Meanwhile, nonperforming loans continued to escalate throughout this 14-year period.

Japanese policy permitted banks to carry mortgage loans at book value regardless of their accumulating loss. Loans were expanded to existing borrowers to enable them to continue to meet their mortgage payments. This response could be rationalized as "smoothing out the bump." Bank investors were protected from failure by stretching out any ultimate return on their investment, relying on a presumed recovery from new growth that never materialized. This accounting cover-up was coupled with government deficit spending—tax revenues declined and expenditures rose—as a means of stimulating economic growth that was delayed into the future.

From the beginning Japan was caught in the black hole of too much negative equity. The banks, burdened with large inventories of bad loans, geared down into debt reduction mode, reluctant to incur more debt, much as their household mortgage customers were mired in underwater mortgages and reluctant to spend. The result was a decade of lost growth that stretched into and absorbed a second decade of dismal performance. The policy cure—save the banks and their incumbent investors—created the sink that exceeded the pull of recovery forces.

Sweden's response to deep recession in the early 1990s was the opposite of Japan's: Bank shareholders were required to absorb loan losses, although the government financed enough of the bank losses on bad assets to protect bank bondholders from default. This was a mistake: Bondholders assumed the risk of default, and a bank's failure should have required bondholder "haircuts" if needed. Nevertheless, the result was recovery from a severe downturn. By 1994 Sweden's loan losses had bottomed out and lending began a slow recovery that accelerated after 1999.

The political process will always favor prominent incumbent investors. They are visible; they contribute to election campaigns; they assist in the choice of secretaries of Treasury and advisers and they suffer badly from balance-sheet crises like the Great Recession and the Great Depression. Invisible are the investors whose capital will flow into the new economic activity that constitutes the recovery.

Growth in both employment and output depends vitally on new and young companies. Unfortunately, U.S. firms face exceptionally high corporate income-tax rates, the highest in the developed world at 35%, which hobbles growth and investment. Now the Obama administration is going after firms that reincorporate overseas for tax purposes. Last week Treasury Secretary Jack Lew wrote a letter to the chairman of the House Ways and Means Committee urging Congress to "enact legislation immediately . . . to shut down this abuse of our tax system."

This is precisely the opposite of what U.S. policy makers should be doing. To encourage investment, the U.S. needs to lower its corporate rates by at least 10 percentage points and reduce the incentive to escape the out-of-line and unreasonably high corporate tax rate. Ideally, since young firms generally reinvest their profits in production and jobs, such taxes should fall only on business income after it is paid out to individuals. As long as business income is being reinvested it is growing new income for all.

There are no quick fixes. What we can do is reduce bureaucratic and tax barriers to the emergence and growth of new economic enterprises, which hold the keys to a real economic recovery.

Mr. Smith, a recipient of the 2002 Nobel Prize in economics, is a professor at Chapman University and the author, along with Steven D. Gjerstad, of the new book "Rethinking Housing Bubbles" (Cambridge University Press).

I have been alleging repeatedly on these pages that the rate of real new business startups is at a record low. I have been alleging but not backing it up with anything. I say it is hard to measure because people file LLCs to protect assets with no intention to ever hire any employees.

I also have been alleging that the stock market going up (until recently) while the economy is stagnant happens because the DOW, S&P, etc. measure only the performance of entrenched players in each industry, who benefiting unfairly from the fact that over-bearing over-regulations are locking out start ups, innovation and the normal process of dynamic, creative destruction.

Now enter Robert Samuelson of Newsweek/Washington Post fame, writing today to fill in the missing details. He poses the question so delicately, interviewing economists: What happened to all the entrepreneurs? Good question. We do not have an explanation, ... One theory is that the cumulative effect of regulations, he says, discriminates against new businesses and favors “established firms that have the experience and resources to deal with it.” What allegedly deters and hampers startups is not any one regulation but the cost and time of complying with a blizzard of them.

We may have a “senile economy,” says economist Robert Litan of the Brookings Institution. That’s senile as in old, rigid and undynamic.

We are taught otherwise. Americans are reared on the notion that we’re the most entrepreneurial of peoples — and many success stories seem to prove it. There’s a long legacy from Thomas Edison to Mark Zuckerberg. Our economy is constantly kept young by the “next new thing.”

Litan dissents. What’s happening now, he says, is that the economy is increasingly dominated by older firms tied to proven products and familiar business methods. Litan is not just blowing smoke. In a new study, he and Ian Hathaway measured the age of U.S. businesses. They were astonished by what they found: From 1992 to 2011, the share of U.S. firms that were 16 and older jumped from 23 percent to 34 percent.

“Like the population, the business sector of the U.S. economy is aging,” they write. The trend “has occurred in every state and metropolitan area, every firm size category, and in each broad industrial sector.”

Even more startling, they argue, is the main source of this aging: a sharp drop in entrepreneurial activity. They define entrepreneurship as the number of startups — new firms ranging from plumbing to biotechnology. From 1978 to 2011, startups fell from about 15 percent of all firms to 8 percent; the slide was gradual until the 2008-09 financial crisis, when it accelerated. By these numbers, the economy’s rejuvenation from below is weakening; though conspicuous, the Internet’s influence is exaggerated.

Other studies reach similar conclusions. Shrinking entrepreneurship is hurting job creation and productivity, write economists Ryan Decker and John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau in the Journal of Economic Perspectives.

Start with jobs. From 1980 to 2010, U.S. employment increased by an average of 1.4 million jobs annually, report the economists. Over the same period, employment gains by startups averaged 2.9 million annually. By this math, startups accounted for more than the total gain in U.S. employment.

That is probably not true, because many of those jobs later disappeared. Most new firms fail within five years. Still, many surviving startups grew rapidly and generated much of the gain in total employment. Companies five years and older don’t much increase overall employment, note the economists. Some older firms add jobs, others subtract them; on balance, gains seem modest. The economy needs the employment boosts of startups.

Something similar is happening to labor productivity. (Productivity is economists’ jargon for efficiency and is measured as output per hour worked.) Higher productivity supports higher living standards. Competition among firms, write the economists, raises productivity. More efficient firms drive out the less efficient. One study attributes 35 percent of productivity gains to this “churning” of firms; the fall in startups dampens these improvements.

All this is consistent with an economic recovery characterized by weak investment, low productivity gains and mediocre employment growth. Older firms serving mature markets have limited opportunities for increased investment and hiring. With some market power, they may also cling to outdated and costly practices. Just recently, Procter & Gamble — the consumer brand giant that makes Tide, Pampers and Crest — said it might eliminate dozens of poorly performing brands and concentrate on big winners.

What happened to all the entrepreneurs? Good question.

“We do not have an explanation,” write the University of Maryland and the Census Bureau economists. Neither does Litan. “One theory is that the cumulative effect of regulations,” he says, discriminates against new businesses and favors “established firms that have the experience and resources to deal with it.” What allegedly deters and hampers startups is not any one regulation but the cost and time of complying with a blizzard of them.

Economist Haltiwanger says the falloff in entrepreneurship changed character after 2000. Before, it was “concentrated in sectors like retail trade and services” and, in part, reflected “mom and pop retail firms being displaced by large . . . firms like Wal-Mart” — a productivity-enhancing shift. Since then, the decline has spread to high-tech sectors and even successful startups create fewer jobs than before.

None of this is reassuring. It challenges the conventional wisdom that the Internet’s relentless advance attests to the economy’s underlying vitality. Old-line companies will change or be replaced by new tech-savvy companies. This may be wishful thinking that conceals deeper forces holding the economy back. We need to discover what they are and what, if anything, might be done about them.

Anything positive uttered on Supply Side Economics from a Democrat and former Obama adviser should go on our Cognitive Dissonance of the Left thread, but we will take a little political economic honesty anywhere we can find it. We need to increase supply in the economy. How would you do that? One idea is to allow in tens of millions more unskilled workers and non workers and the other ideas include "development of energy resources and improvements to the business tax system". Unmentioned is that, to the rest of the Dem party, development of energy is to leave fossil fuels in the ground while cronying up the uneconomic sources, and improvement of the business tax system means to raise the world's highest rates even higher!

The U.S. economy continues to operate way below estimates of its potential that were made prior to the onset of financial crisis in 2007, with a shortfall of gross domestic product now in excess of $1.5 trillion — or $20,000 per family of four. Just as disturbing, an average economic growth rate of less than 2 percent since that time has caused output to fall further and further below those estimates of potential. Almost a year ago, I invoked the concept of “secular stagnation” in response to the observation that, five years after the financial hemorrhaging had been stanched, the business cycle was not returning to what had been previously thought of as normal levels of output. http://larrysummers.com/wp-content/uploads/2014/06/NABE-speech-Lawrence-H.-Summers1.pdf

Secular stagnation, in my version, has emphasized the difficulty in maintaining sufficient economic demand to permit normal levels of output. Given a high propensity to save, a low propensity to invest and low inflation, it has been impossible for real interest rates to fall far enough to spur the economy to its full potential, since nominal interest rates cannot fall below zero.

Given the various factors — rising inequality, the lower capital costs needed to enter dynamic businesses, slowing population growth, increasing foreign reserves and greater spreads between borrowing and lending cost — operating to reduce natural interest rates, it continues to seem unlikely to me that, as currently structured, the U.S. economy is capable of demanding 10 percent more output with interest rates that are consistent with financial stability. So ­demand-side secular stagnation remains an important economic problem.

But as the work of Northwestern University economist Robert J. Gordon in particular points up, it may well be that now supply-side barriers threaten to hold back the economy before constraints on the ability to create demand start to bind. Two ways of looking at the situation point up the difficulty.

First, while I have emphasized that U.S. GDP is still far short of what pre-crisis trends predicted, the unemployment rate, now at 6.1 percent, has reverted most of the way back to even relatively optimistic estimates of its normal level. In other words, even as growth has been poor, it appears that demand has been advancing rapidly enough to substantially reduce slack in the labor market. As Gordon rightly emphasizes, weak growth along with significant decreases in labor slack suggest a major slowing of the growth of potential output.

To be fair, one can quarrel with the use of the headline unemployment rate as a measure of slack in the labor market. But the degree to which the labor market appears to be normalizing is even greater if one looks at measures of job openings and vacancies, new unemployment insurance claims or short-term unemployment.

Second, even with Friday’s relatively weak employment figures, monthly job growth has averaged more than 225,000 since February. If this trend continued, what would happen to unemployment? This, of course, depends on what happens to labor force participation, which has been trending down in recent years because of the aging of the population and long-term structural trends. Assume, for simplicity’s sake, that participation rates remain constant (an optimistic assumption) and that the economy keeps on creating 200,000 jobs a month. A simple calculation reveals that the unemployment rate would fall to the 4 percent range by the end of 2016.

While such a low unemployment rate is conceivable, it seems more likely that employment growth will slow at some point, either because of employers having difficulty finding workers, rising wages or government policy decisions. In any of these cases, the economy would be held back not by a lack of demand but a lack of supply potential.

Why has supply potential declined so much? This will be hotly debated for years to come. Part of the answer lies in the effect of past economic weakness. Part of it is the brutal demographic realities of an aging population, the end of the trend toward increased women’s labor force participation and the exhaustion of the gains that could be won from an increasingly educated workforce. And part is the apparent slowing of productivity growth.

To achieve growth of even 2 percent a year over the next decade, active support for demand will be necessary but not sufficient. In the United States, as in Europe and Japan, structural reform — to both increase the productivity of workers and capital and to increase the number of people able and willing to work productively — is essential. Infrastructure investment, immigration reform, policies to promote family-friendly workplaces, development of energy resources and improvements to the business tax system will become ever more important.